Experian Deceived Consumers, Fined $3 Million

Today, the Consumer Financial Protection Bureau fined Experian $3 million for deceiving consumers in marketing it own credit scores. Experian is one of the credit reporting agencies that created its own credit scoring, sometimes known as fako scores. They are fake because lenders do not use them in deciding whether to give consumers credit. Creditors generally rely on FICO scores, not the agencies’ own scores.

The CFPB said that from 2012 through 2014 Experian falsely claimed the credit scores it sold to consumers were used by lenders. The CFPB ordered Experian to truthfully represent how its credit scores are used and to pay a civil penalty of $3 million.

Experian calls it score, the “PLUS Score,” but it is only an “educational” credit score and is not used by lenders for credit decisions. Moreover, there were often significant differences between the PLUS Scores and the credit scores lenders actually use thus misleading consumers.

In a related matter, the Fair Credit Reporting Act requires Experian and the other nationwide credit agencies to provide a free credit report once every twelve months from AnnualCreditReport.com. The CFPB said that until March 2014, consumers getting their report through Experian had to view Experian advertisements before they got to the report, which violated the Act. In a consent decree, Experian agreed to make required changes to its advertising.